On 28th February, TV Mohandas Pai, the well-known angel investor, tagged finance minister (FM) Nirmala Sitharaman in a post on X, drawing attention to what seems to be a case of enforcement overreach: the arrest of Rishi Gupta, managing director and chief executive officer (MD& CEO) of Fino Payments Bank Ltd, over alleged evasion of goods and service tax (GST). In a rare response, the FM posted, “Thanks for sharing. Will check.” (Read: Fino Payments Bank MD&CEO Rishi Gupta’s Arrest in GST Case Sparks Scrutiny; FM Says ‘Will Check’ After Public Outcry)
For the record, Fino Payments Bank clarified that the GST issue pertains to a 'business partner' over whom the Bank had no operational control. Also, despite the FM's public acknowledgment, Mr Gupta has remained under arrest since 27th February.
The incident triggered a debate about enforcement abuse by investigation agencies: that individuals can be arrested, based on alleged infractions, with minimal evidentiary basis.
Just a day earlier, in an explosive judgement, a Delhi court discharged all 23 accused in the much-publicised Delhi excise policy case. This was no ordinary matter. It involved five top elected leaders of the Aam Aadmi Party (AAP) who had spent a cumulative seven years in jail during investigation by the central bureau of investigation (CBI). They included chief minister (CM) Arvind Kejriwal (detained for five months) and deputy chief minister Manish Sisodia (over 17 months).
The CBI, predictably, filed an appeal. In asking the FM to intervene, Mr Pai raised two fundamental questions: 1) How can the CEO of a regulated bank be arrested for an issue with a business partner? Is this not overreach? 2) The finance ministry has conferred vast enforcement powers under the GST regime. What safeguards do citizens have against misuse of powers?
The Delhi judgement reveals a wider troubling question: If an elected CM, deputy CM and other ministers can be arrested on flimsy charges and discharged only after lengthy jail terms, how much worse is it for ordinary citizens whose arrests trigger no public outcry?
This judicial self-reflection reveals a systemic problem; but the issue extends far beyond this admission. In its suo moto hearing on widespread digital fraud, the Supreme Court has repeatedly lashed out at banks for failing to protect customers through a swift response to unusual fund transfers. It even called banks a liability. But the Court seems to have overlooked a fundamental reality: the real barrier to financial safety is public fear. Ordinary citizens fear they could be harassed, victimised, arrested and extorted by government agencies, regardless of guilt. The deeper fear is that justice itself has become a distant dream. With 54mn (million) pending cases moving at glacial speeds, the judicial process itself becomes punishment for the innocent or wrongly accused.
In another far-reaching order – Radhika Agarwal vs Union of India—in February 2025, the Supreme Court heard nearly100 petitions involving arbitrary arrest, coercion and misuse of power by investigation agencies, including as a tax recovery tool. (Read: SC calls for stricter regulation of warrantless arrests by revenue officers). The Court ruled that, although tax officers possess arrest powers, they cannot exercise them without robust constitutional safeguards. Arrests must be justified, based on credible evidence, explained to the arrested person and follow due process. The Court explicitly stated that arrest cannot serve as a tool of revenue recovery.
The number of cases heard in the Radhika Agarwal order established a systemic pattern of enforcement misuse; but this order is also not unique. In Krishnaswami Vijayakumar vs the Deputy Director of Income-Tax (Investigation), the Supreme Court imposed ₹2 lakh in costs on the income-tax department as compensation for pursuing criminal prosecution for alleged tax evasion, despite lacking essential elements of ‘wilful’ concealment and ‘gross non-compliance’ with its own binding procedures.
A parallel instance, with political overtones, arose in the May 2025 Supreme Court stay order in the high-profile Tamil Nadu state marketing corporation (TASMAC) case. The enforcement directorate (ED) accused the state-owned corporation of financial irregularities and money laundering, treating it as criminal, following extensive raids. When the case reached the Supreme Court, a bench, led by then chief justice BR Gavai, reprimanded the ED, saying it was ‘crossing all limits’ and threatening the federal balance by encroaching on state authority when an investigation was already ongoing.
Despite all these orders and precedents, the GST authorities arrested the MD of Fino Bank, a tightly regulated entity, for the conduct of a business partner. All banks, particularly the larger ones, work with hundreds of partners and merchant establishments. Could such arrests extend to them as well? While Fino Bank's impact is limited, similar action against a larger bank could trigger deposit runs with far more permanent systemic consequences.
In a closely regulated environment, can a single enforcement agency initiate actions with potential wider systemic impact on investor or depositor confidence without consultation with sectoral regulators such as the Reserve Bank of India (RBI) or the Securities and Exchange Board of India?
Arresting the MD of a regulated entity and treating professionals like ‘hardened criminals’ creates a chilling effect on India's stated commitment to 'ease of doing business.' In 2024-2025, ED went even further by issuing summons to senior advocates to question legal opinions they had provided to clients. This is a complete violation of client confidentiality. Only after repeated such summons did the Supreme Court intervention lead ED to issue a circular requiring director-level approval for any summons to advocates. This contains the problem but does not eliminate it.
These seemingly tough enforcement actions may have had some justification, if India's enforcement agencies secured meaningful convictions. Instead, CBI loses 70%-75% of cases at tribunals and 80%-85% at high courts. Worse, it has often closed high-profile investigations after years of raids, incarceration and financial devastation to individuals and families. The pattern of politically-linked investigations is not limited to the current regime; it has been endemic across multiple political eras.
What has truly weaponised this system is the judiciary's failure to award serious punitive damages to victims of politically motivated, extortive or coercive investigations.
We have grown accustomed to accepting that 'the process is the punishment'—even when a shocking 75% of India's prison population comprises under-trial prisoners. The tragedy is that real criminals—embezzlers, extortionists, organised crime syndicates and corrupt politicians—navigate the same system with ease.
We can only change this by rebuilding the justice and enforcement system to ensure that arrest requires evidence; detention requires judicial oversight; justice arrives in a meaningful timeframe; and judges are also made accountable for delays.
This will only be solved when erring or over-enthusiastic officers (Police, ED, CBI, whatever) are personally penalised by the Courts. MOst of the time their Lordships make grand statements but no punishment is ever visited on the erring officials. WHy then would they mend their ways???
The pattern of politically-linked investigations is not limited to the current regime; it has been endemic across multiple political eras. I agree but the question is that an ordinary citizen does not have time, energy and resources to fight such exigencies in a court of law and is left to the mercies of such investigative agencies. Some lawful protection and solution has to be found.
One solution to such a problem is making the irresponsible officials, personally, not departmentally, responsible financially for proved losses to the wrongly accused persons. If a department pays, the irresponsible official gets away scot free and will repeat the act. There is no incentive for government officials to expedite any investigation or case, because the legal costs are from public money, this partly the reason why there so many undertrials, government officials are least concerned.
MR T V Mohandas Pai is close to the Government and he elicited a brief reply from the FM, no wonder what could be the fate of those who have no connections with the so called. Vicksit Bharat. Like Congress BJP also studiously follows the same culture.
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